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Flat-rate regime.

Studio Paci has a long experience in assisting flat-rate taxpayers.
Law n.190 of 2014 introduced into our tax system the so-called 'forfettario' regime, i.e. a simplified accounting and tax regime that provides for taxation based on a tax substituting Irpef and related surcharges, as well as Irap.
Individuals adhering to the flat-rate regime determine their taxable income by applying to the amount of revenue or remuneration received the profitability coefficient differentiated according to the ATECO code characterising the activity exercised; mandatory social security contributions are deducted from the income determined on a flat-rate basis.
The following table summarises the profitability coefficients for each activity.

INNOVATIONS FINANCE ACT 2022-2023

The Finance Act 2022-2023 made significant changes to the flat-rate regime, including the increase of the revenue or compensation limits and the introduction of an anti-avoidance clause.

As of 2022, electronic invoicing also became mandatory for entities under the flat-rate regime, subject to some specific exceptions. In 2023, the threshold of admissible revenue or remuneration was increased from EUR 65,000 to EUR 85,000, allowing more persons to benefit from the facilitated regime.

In addition, an anti-avoidance clause has been introduced that establishes the application of the ordinary regime for those entities that exceed EUR 100,000 in revenue or remuneration.

In this situation, VAT becomes due from the transactions that cause this threshold to be exceeded.


 
CAUSES OF EXCLUSION FROM THE FLAT-RATE REGIME
Persons engaged in business, the arts or professions who simultaneously participate in partnerships, professional associations or family businesses, or who directly or indirectly control limited liability companies or associations in participation, which engage in economic activities directly or indirectly related to those carried out individually, cannot benefit from the flat-rate scheme.
The exclusion also applies to natural persons whose activity is exercised 'predominantly towards employers with whom there are ongoing employment relationships or had been employment relationships in the two preceding tax periods, or towards persons directly or indirectly related to the aforesaid employers'.
Also excluded are those who, in the previous year, received employment and/or assimilated employment income in excess of €30,000, unless the employment relationship in the previous year has ceased (provided that no pension income or employment income from another employment relationship was received in that year).
 
EXIT FROM THE FLAT-RATE SCHEME
The flat-rate regime ceases to be effective from the year following the year in which even one of the access requirements ceases to apply, or one of the grounds for exclusion occurs.
 
 
TAXATION

A single tax is levied on the taxable income determined on a flat-rate basis, at the rate of 15%, replacing personal income tax, regional and municipal surcharges and IRAP.
This tax is reduced to 5%, for 5 years, for those persons who start a new activity and who meet the following conditions the taxpayer must not have exercised, in the three years preceding the start of the activity, another artistic, professional or business activity, even in associated or family form;
the activity to be exercised must not constitute, in any way, a mere continuation of another activity previously carried out in the form of employment or self-employment, except where the activity previously carried out consists of the period of compulsory practice for the purposes of exercising the arts or professions;
 
SIMPLIFICATIONS OF THE FLAT-RATE SCHEME

The adoption of the flat-rate regime entails a number of simplifications for both VAT and direct tax purposes.
Persons opting for the flat-rate scheme:

  • are not subject to the obligation of electronic invoicing;

  • do not charge VAT on invoices to their customers and do not deduct VAT on purchases;

  • do not show the withholding tax on their invoices;

  • do not settle VAT and do not pay it;

  • are not obliged to file annual VAT returns, VAT returns of periodic settlements and returns of data on invoices issued and received.

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